As global business and cross-border transactions have proliferated, there are significant implications for commercial customers who rely on banks and payments providers to provide a flawless service faster than ever. So how do can the financial services sector put value back into the process? Below Abhijit Deb, Head of Banking & Financial Services, UK & Ireland, Cognizant, explains for Finance Monthly.

Consumers now expect easy and immediate payment services, no matter where they are or what they are buying, whatever the payment method. It may be symptomatic of the ‘age of instant gratification,’ but it also demonstrates how people value financial agility. This was highlighted by a recent system failure with the UK’s Faster Payments System that caused mass inconvenience and frustration among consumers. Whether paying a friend back for last night’s dinner or sending emergency funds to family travelling overseas, the offerings of digital banks such as Monzo and Starling are testament to the industry’s efforts to keep up with rapidly evolving consumer expectations. This trend has now also filtered into the business world.

The technological saturation of the financial services industry has been met with an increasing affinity for risk amongst business customers. Churn has never been easier. If one bank cannot meet their needs, customers can leave, and it has never been easier for them to switch financial providers in a congested market. In essence, the evolution of the payments ecosystem encompasses much more than innovation targeted at consumers.

Understanding the value of payment data

Of course, there are some interesting examples of innovation in consumer payments. Gemalto’s biometric bank card, for example, highlights that the area is steadily advancing, despite scepticism that there will be mass consumer acceptance.

However, the pace of change is accelerating rapidly in terms of offerings. For instance, blockchain is being harnessed by banks and technology vendors as a prime enabler of an instant B2B payments infrastructure. Industry players realise that the methods that can derive benefits today are largely based on a better understanding of the value of payment data.

While such data has mostly been used to create a hyper-personalised customer experience for consumers, it is increasingly being harnessed in services to businesses, even outside the financial services sector with companies such as Google recently purchasing Mastercard credit card information to track users’ spending to create an additional revenue stream.

This evolution of B2B product consumption is emerging as a key theme across the broader financial services market and is increasingly allowing businesses of all sizes to ‘window shop’ for the products and services they want the most. Providers are racing to commercialise the increasing amounts of account information, a trend that has increased in the wake of regulation such as PSD2 (the Second Payment Services Directive). By doing so, they can position themselves as the customer’s ‘digital front door’ to a wider range of services such as financial advice, merging the dimensions of ‘fast money’ (a consumer’s daily spending) and ‘slow money’ (future spending, saving and investment).

Adopting innovations such as automation, means that banks and card providers can help their commercial customers transform payments into a process that can add real value and allow the integration of additional services. By making financial reporting much easier, organisations can glean better insights into data showing purchasing trends among their customer base. The emergence of machine learning and self-learning systems will make this process much more efficient, even incorporating features like automated financial advice or fraud detection to become commonplace.

Consumption models are changing

Therefore, as payments processors and providers realise the opportunities in the business payments ecosystem, innovation accompanied by a commoditisation of payments services is on the increase, characterised by providers trying to add more value in the supply chain. Although currently most relevant to the SME market, companies of all sizes are being targeted with added value payments services such as reporting, to help them make better decisions. For example, retailers working with Barclays have access to add-ons and third party apps via the bank’s SmartBusiness Dashboard, including basic analytics to see what customers are spending their money on. This information can then inform marketing schemes that tailor product promotions to specific customers.

Ultimately, the more choice the customer has and the more informed they feel, the more likely they are to return to the same bank to take out a loan or use other services.

With so many contributors to the payments ecosystem, and an increasing number of organisations using the analysis of payment data as a key differentiator against competitors, it is crucial that banks, regulators and payments processors co-ordinate their efforts and use the best technology available to create an efficient system. And with the Faster Payments Service deal up for renewal, a system that underpins most of the UK’s banks and building societies, perhaps it is time for the government to consider how it can best support a payments infrastructure that works for all.

More often than not, you will hear stories in the news of Millennials complaining that their generation is hard done by, but can you really blame them? Unlike today’s baby-boomers or Generation X, Millennials are saddled with an uncertain economic future and have the tightest cash flow compared to previous generations all because of the sheer complexity of modern life. This is a worrying fact and according to Christer Holloman, CEO & Co-founder of Divido, it’s time we cut Millennials some slack.

The burden of mounting student debt combined with an unrelenting affordable housing crisis and the fear of another credit crunch has made this generation particularly wary about their economic futures. This is translating into Millennials also becoming averse to borrowing from banks and sceptical about the financial services industry as a whole. Debt-conscious Millennials now favour prepaid and debit cards over the credit variety. This caution has two side-effects. Firstly, in a world governed by credit scores, it diminishes—some would say ironically— their potential to improve their credit scores and show that they can be trusted with credit and loans. Secondly, it means that those high-ticket, quality purchases are often deferred unnecessarily.

It’s fair to say that as a generation, Millennials suffer from perhaps the largest misconception about their spending habits, often criticised for being less money-savvy to other demographics. However recent research from Deloitte suggests Millennials aren’t as impulsive and money-reckless as the media makes them out to be. They are most likely, for example, to buy luxury, high-end goods when they receive extra income (such as a bonus) to avoid accruing debt. Because of this, it is crucial that businesses selling expensive aspirational goods targeted at Millennials, adjust their payment models, allowing consumers more flexibility and choice- choice that doesn’t stop abruptly at the checkout. It’s clear that this new wave of customer is not prepared to load up credit cards, meaning that if these businesses don’t change, their sales will become more sporadic.

Rarely is this negative attitude towards credit and debt addressed by a more convenient way to pay. This is curious given that Millennials now make up a quarter of the UK population, emphasising just how valuable offering finance options to this age group can be.

Millennials value convenience, flexibility and honesty from retailers and banks; all qualities which the main credit card providers are not renowned for. Paying by finance empowers customers by giving them the choice and flexibility that they crave from businesses. Allowing consumers to take a stronger control of their finances by spreading out their costs in monthly instalments at 0% interest, not only increases loyalty but makes those previously out-of-reach purchases more of a reality by removing the initial intimidating price tag. If more retailers adopted this system, the Millennial generation has a chance of becoming the next premium consumer base.

There has been a revolution in subscription payments for digital services over the past five to ten years. From Netflix to Spotify and even Nespresso, people are now very happy to spread out and manage their costs as they earn – it’s becoming the new norm. It is a model both the high street and online retailers should look to emulate in order to reach this influential generation and stay competitive.

The subscription model is now being rolled out to attract more affluent audiences with higher-ticket items such as cars as seen in Jaguar Land Rover’s recent launch of Carpe. Bitesize regular payment options are another way retailers can keep their customers loyal for longer by reassuring them that they are getting a good deal with the best long-term gains.

It’s clear that Millennials’ affinity for technology and new ways of doing things is reshaping the retail sector and its offerings. Having a strong brand is no longer good enough to lock in a sale with them. Retailers now need to work harder, tap into the financial psyche and purchasing mindset of Millennials to give them the flexibility and choice to own their payment plans. Not only will this ensure they’re not spending beyond their means, but it also allows them to buy the quality, higher-end products they desire then and there.

Recent figures compiled by banking industry group UK Finance have revealed that over £500 million was stolen from customers of British banks in the first half of 2018, of which £145 million was due to authorised push payment (APP) scams – referring to when people are duped into sending money to a fraudster’s account. While it is often a bank’s policy to refuse refunds to customers who fall victim to these schemes, Aspect Software believes financial institutions need to demonstrate a concerted commitment to addressing this problem head-on if they are to keep their customers on-side, by focusing on nullifying the methods that criminals use.

Of the overall amount of money stolen, £358 million was lost to unauthorised fraud – which refers to transactions made without the knowledge of the victim. While this represents the majority of stolen funds, UK Finance confirmed that two-thirds of unauthorised fraud is thwarted by financial institutions, meaning that banks are having some success in this area. APP, however, represents a different challenge entirely, with regulations meaning that banks are often well within their rights to reject refunds for this type of fraud.

Cameron Thomson, VP Northern Europe & Worldwide Subscription Sales at Aspect, said: “Banks turning down compensation claims due to a customer’s own errors is understandable to an extent. However, banks – like so many other businesses – are customer-focused institutions with a responsibility for those in their care. People are being hit by increasingly sophisticated social engineering schemes and related scams, including SIM swap hacks or posing as a highly convincing text message, email or web page purporting to be from the bank.

“A certain level of common sense from customers should rightly be expected, but the growing skills of fraudsters in appearing legitimate mean that it has become unrealistic to expect every customer to distinguish a fraudulent request from a genuine one.”

While Thomson considers it crucial that banks reaffirm their efforts to teach adequate security hygiene to their customers, he also believes that it is time that financial institutions stepped up their efforts to detect techniques such as SIM swap or social engineering campaigns, before taking the necessary steps to reinforce data security measures and shore up the accounts most at risk.

He added: “Humans will always be the weak link in the security chain, so banks should be doing everything in their power to mitigate the impact of errors made by individual customers. This means that financial institutions should have fraud detection capabilities in place that are able to keep them abreast of the latest scams, as well as automatically flag and escalate instances of issues such as SIM swap or particularly successful social engineering schemes. Banks might not be compelled by regulations to refund customers, but there’s a possibility this could change very soon, and demonstrating a steadfast commitment to customer welfare will always be positively received.”

Thomson concluded: “Key to this is also a willingness by banks to work closely with regulators to work out the best possible course of action to tackle APP. The issue of compensating defrauded customers can be a sticky one, so engaging in open discussions with regulators can go a long way towards ensuring that we arrive at a positive resolution to the APP conundrum.”

(Source: Aspect Software)

Research from Dun & Bradstreet reveals that UK businesses prompt payments deteriorated in in the three months to June (Q2). On average, less than a third (31.5%) of payments were made on time compared to 31.3% in the previous quarter. The average payment delay in the UK is around 15 days, two days higher than the European average.

Dun & Bradstreet’s UK Quarterly Industry Report shows a clear split by sector, with ‘Health/Education/Social’ and ‘Finance/Industry/Property’ recording the sharpest deterioration in payment performance (down by 1.7% and by 1.4% respectively quarter-to-quarter). However, more positive results were recorded for the Consumer Manufacturing sector which demonstrated the largest improvement, followed by the ‘Eating and Drinking’ (0.8%) and ‘Materials Processing/Mining’ (0.6%) sectors.

Late payments remain a significant problem for UK-based small- and medium-sized enterprises (SMEs). On average, larger companies of 251 employees or more only paid 8.1% of their payments promptly, compared with smaller companies of 250 employees or less, which averaged at 25.7% for paying their suppliers on time.

Commenting on the results, Markus Kuger, Senior Economist at Dun and Bradstreet said: “What is perhaps most worrying from the data is the sheer volume of late payments UK-based companies are having to contend with, not least as a result of weaker retail sales and the uncertainty of the impact of Brexit on businesses. Although there is legislation in place to assist small businesses with their struggle against late payments, the majority of the time they take no action for fear of alienating their larger customers. Late payments affect businesses across the sectors and of all sizes and give rise to tighter financial conditions and higher administrative, transaction and financial. With continued uncertainty for the foreseeable future, it is likely that we will see further deterioration in prompt payments due to rising headwinds triggered by the Brexit vote.”

(Source: Dun & Bradstreet)

With a world that increasingly relies on the individuality of society, transformation towards bespoke platforms and mechanisms is inevitable. Here David Orme, Senior Vice President of IDEX Biometrics, discusses the growing benefits of biometrics in the world of money, a world which for consumers is deemed one of the most private and personal to each of us.

Sadly, our relationship with money and purchases is not as personal as it used to be. Gone are the days when people would visit their local banks, queue up at the kiosk and request to withdraw cash from their account via the bank clerk.

Modern technology has positively shaped personal finance in many ways by providing convenience and security through areas such as online banking and payment cards. As a result however, our personal relationships with our money is quickly deteriorating.

After all, we live in a world of personalised experiences. Amazon offers us individual recommendations, Spotify suggests great new songs based on our listening, and Netflix knows what we’ll love to watch. We now expect everything to be unique and tailored to us and our personal preferences. It puts us in control and validates that we are each individuals with our own specific likes and needs; that in a world of 7.6 billion people, we have a voice.

This taps into an innate love of the personal... Something that reflects who we are: from a monogrammed shirt, a personalised number plate, a tailored itinerary for your holiday to simply how you like your coffee.

Yet there are some things in life that have resisted being personalised: credit and debit cards are one such example. They’re all the same. All dull and functional. Generally, the only way to personalise cards currently is to use a PIN with significance such as a birthday, as insecure as that may be.

But as the protagonist from the 60s TV show, The Prisoner, famously shouted “I’m not a number!” None of us are numbers. We are all unique. And what is more unique than our fingerprints?

Biometric intervention

Our society has become increasingly security conscious, in a landscape characterised by the rising skill levels of cyber criminals. With biometric technology already implemented as a security measure in airports, and even on the latest smartphone devices, the idea of fingerprint recognition should not be a foreign concept. Instead, due to it already being a consumer habit, biometric payment cards will be easily adoptable, thus paving the way for a smooth transition.

Traditional methods of authentication such as the Personal Identification Number (PIN) are becoming more and more outdated. Failing to combat fraud, the PIN has seen millions lost to scams ranging from shoulder surfing to lost and stolen, even to opportunist criminals discovering PIN codes written down.

By introducing a biometric payment card, consumers will be far more protected from fraud, which will eventually bring an end to the PIN. By storing a fingerprint sensor directly onto the payment card, as opposed to a central database, there is nobody else in the world that will be able to connect with the card to issue a transaction other than the owners themselves. Thus, creating a far more accurate method of authentication and the ultimate personal relationship between consumers and their cards. With everything else now seemingly moving towards a digital platform, this is the last piece of physical interaction in payments and therefore a much-needed opportunity to build a personal connection and better security to combat fraud head-on.

Specifically, the reference fingerprint can easily be uploaded to the card by the user, at home, and once that is done they can use the card via existing secure payment infrastructures — including both chip and ID and contactless card readers — in the usual way.

Once it is registered and in use, the resolution of the sensor and the quality of image handling is so great that it can recognise prints from wet or dry fingers and knows the difference between the fingerprint and image ‘noise’ (smears, smudging etc.), that is often found alongside fingerprints. The result is a very flexible, durable sensor that provides fast and accurate authentication.

Fingerprint recognition will provide a clearer means to distinguish an individual from everyone else on the planet. This technology will not only assist the financial sector, instead, its benefits will transcend into a range of areas, from bolstering national identification which will help address healthcare and social fraud, assisting financial inclusion and maintaining access to controlled spaces such as government buildings.

How soon is now?

Fortunately, the long-held ambition to add biometrics to cashless transactions has now been achieved. The production and trials of an extremely thin, flexible and durable fingerprint sensor, suitable for use with payment cards, is underway in countries such as Bulgaria, the US, Mexico, Cyprus, Japan, the Middle East and South Africa.

However, we anticipate that each banking customer may deploy as many as 100,000 biometric cards to their account holders by the end of 2018 and that biometric bank card adoption will go into many millions from 2019. Paving the way for payments to become personal once again.

Personal relationships are a key part of life, they offer us a sense of importance and happiness. The time is now for this to extend to our payment cards. Biometric payment cards will create a unique connection, with transactions exclusive to the owner, shunning anyone else on the planet trying to access the sensor. Not only is this integral to creating a personal relationship between the card user and their bank, but the security benefits are therefore more profound as the challenge of forging fingerprints is a far more complex one for criminals

Though biometric technology is already in-place across our society, its potential within payments has yet to be truly discovered. Before this can be achieved, banks need to gain consumer trust and promote the value of biometric technology before its benefits can be realised by us all.

The UK’s passion for innovation means it is now seen as a global leader in the development of financial services that are powered by prepaid technology, according to data released by Prepaid International Forum (PIF).

PIF, the not-for-profit trade body representing the prepaid sector, reports that the percentage of UK adults using tech-based financial services has risen to 42% (up from 14% in 2015). The UK is at the forefront of this growing market in Europe, ahead of Spain (37%) and Germany (35%). The UK is third globally to only China (69%) and India (52%).

Fueling this growth in the UK is prepaid, which has become a driving force for the fintech companies who are rapidly transforming the way we pay and get paid. The prepaid sector in Europe is growing faster than anywhere else in the world (up 18% since 2014 compared to just 6% growth in the US) is now worth $131bn*.

Experts believe that the UK’s passion for innovation may help to offset the potential negative effects of a no-deal Brexit, should UK financial service providers lose its right of automatic access to EU markets.

Diane Brocklebank, spokesperson for PIF, says: “The UK is a globally significant player in the creation of prepaid-enabled financial services with consumers keen to adopt new and innovative services and a growing industry of experts with the knowledge needed to develop such products and bring them to market.

“In a global sector, the UK stands out as being a key market and one that should retain its prized status even if it loses its financial passporting rights as a result of a no-deal Brexit.”

The UK’s status in prepaid is significant as it is a sector that is growing much faster than other financial services. In Europe, the 18.6% growth in prepaid since 2014, compares to just 7.8% growth in consumer debit and 5.8% growth in consumer credit markets*.

Diane Brocklebank, continues: “Prepaid and Fintech are the areas where people looking to invest in financial service businesses are seeing the most potential. This is being driven by increased dissatisfaction with mainstream financial services and a desire for greater innovation and flexibility, particularly amongst consumers looking for lower costs and fees as well as smartphone accessible products.

“The UK’s status as a global player is therefore crucial to it continuing to be seen as a key market for such investment. To maintain this, it must continue to be a positive environment for innovation with a supportive regulatory environment and strong skills base.”

(Source: PIF)

Do you want to go from being a stock market dreamer to a high earner? A new tool could be what you need to transform your hindsight into insight.

How Rich Would You Be? uses market data from the past 12 months to reveal exactly what you could have made if you invested in a variety of cryptocurrencies, commodities and companies. It also forecasts the potential gains for each over the coming months to predict the next big investment opportunity.

Via a bespoke algorithm that uses machine learning, the tool feeds historical data on all 15 options through a recurrent neural network to unveil the future rise and fall in value for each investment.

The 15 commodities monitored include:

• Bitcoin
• Ethereum
• Ripple
• Bitcoin Cash
• EOS
• Gold
• Oil
• Copper
• Wheat
• Coffee
• Apple
• Alphabet (Google)
• Microsoft
• Amazon
• Facebook

All data is displayed in concise visualisations, allowing you to compare individual or multiple investments side-by-side.

The future predictions reveal that the cryptocurrencies will experience the highest percentage increase, yielding more profit than commodities or companies.

The algorithm also reveals that the value of Ethereum will skyrocket from $289.26 per unit to $788.42 if it continues on its predicted path - an astounding 173% increase by October 28th.

Similarly, Ripple investors should look forward to the next month since the cryptocurrency is charted to rise in value by 159% - surging from $0.34 per unit to $0.88 per unit.

Alphabet Inc should perhaps be avoided as the value of the company is set to drop -10% per share. Following in Alphabet’s footsteps is Apple, which is set to fall -8% from $227.63 per share to $208.47.

Despite the unpredictability of the cryptocurrency market, the historical data shows that when compared against commodity and company investments, EOS, Bitcoin and Ripple boasted three of the top five investments.

EOS aficionados who invested in September 2017 will have noticed a 786% increase in price per unit over the last year - a jump from $0.73 per unit to $6.47.

Though it is now set to undergo a negative percentage change, Amazon experienced a 106% increase in value per share between September 2017 and September 2018.

Unfortunately for commodity investors, the two investments that have made the biggest losses over the past year include coffee and copper. Coffee has made the most significant loss over the last year, with a -20% change - dropping from $129.65 per pound to $1103.33.

Copper investors will also have been disappointed with the -12% change in value over the previous year from $3.06 per pound to $2.68.

Commodity investors who chose to invest in oil over copper would have enjoyed a 46% rise from $48.07 per barrel to $69.97 in just one year.

Values: Historical and predicted change in 15 leading investment choices

(Source: How Rich Would You Be?)

In 1880, we introduced the first ever credit voucher, which led the way as a pre-curser to credit cards and the likes, followed by the reveal of metal deferred payment cards from Western Union in 1914 and subsequently several appearances of payment or credit cards that allowed to users to credit shop at specific stores, like Diner’s Club, the first independent credit card company in the world.

Since American Express made credit cards popular in 1958, the idea of buying with cash that isn’t yet available to the buyer has evolved into the concept of cashless buying with money we do have. The accessibility, ease and efficiency of credit cards led to a culture, globally, that accepts plastic cards as the norm. The industry 4.0 revolution now presents the next stage in said evolution, whereby we are experiencing the proliferation of contactless payments, both via plastic debit cards and more recently, via smartphones.

2017 marked ten years since contactless was introduced, so it may still be another 10 years until we see an almost complete eradication of cash from western society. Currently, contactless payments account for just over a third of all payments in the UK. Equally over a third agree that the UK will be cashless in another 10 years. The further spread of contactless via mobile, which would only go to shorten those 10 years, is however hindered by the need to link a bank account with the customer’s smartphone, making this option inaccessible to a greater part of the world’s consumers.

A recent study conducted by Forex Bonuses reveals that Canada is currently number one in the list of top cashless countries worldwide , with 57% of transactions nationally being made without cash, as opposed to 2% in Sweden and France, 52% in the UK, and 10% in China. In China however, 77% of people said they were aware of cashless options, which could mean potential for a huge boost of cashless transactions in years to come. All in all though, 83% of global transactions are in cash, according to Western Union.

The ease of cashless transactions proves the potential for revolutionary popularity, as with a flick of a finger or a swipe of the thumb, all liquid assets can be accessed and moved around. The secondary benefits are the effect a cashless society can have on crime, both in terms of banks & financial institutions, as well as street crime and potential for muggings. In addition, though most cash payments do result in a printed receipt, digital records of transactions are few and far between, and whether by blockchain or other, documenting digital footprints for transactions has the capacity to help governments better set policy, tax citizens and stop fraud, as well as help banks to better monitor financial spheres and adjust rates and inflation accordingly. The introduction of Open Banking will also only go to facilitate these benefits in the digital payments sphere.

So, why are we not already making the world completely cashless and sending all our money to be burnt? One question we should ask first is whether this is truly something people want. Bloomberg reports that a recent move by Indian authorities to remove 86% of cash in circulation proved to be difficult, and shocked many cash dependent markets. The poor especially depend highly on using cash, and making everything digital could put lower earners at a serious disadvantage and the prospect of governments and banks having so much control of people’s finances does pose further concerns. Another major issue is that while street crime and fraud could be better monitored and prevented, cybercrime could rise in equal or greater measure, depending on the vulnerability of transaction systems.

Further on the topic of cybercrime, back in the day ‘looking over your shoulder’ referred to watching your back for pickpockets; that then became about being aware of criminals stealing your PIN, but the new risks are money swiping and the potential for losing your contactless card, which can then be used by whoever finds it or picks it up. Equifax recommends lining your wallet to eliminate the risk of signal and antenna making contact in a money swipe grab, which in essence, is today’s version of pickpocketing.

Bitcoin and the blockchain are proving useful in the payments security sphere, but in their short-lived popularity have already displayed weaknesses and risks that will need time to fix. Equally, infrastructure will have to keep up, as Visa have already showed that IT outages can cause serious disruptions, leaving users unable to make or take payments. On top of this, connections are required to record and document the data, as well as transfer information between the buyer, seller and bank; if the connection is affected in any way, this can create major difficulties. With cash, these issues don’t really exist.

Though no longer king, cash is still the biggest way of actioning transactions around the world, and the physical act of exchanging money still feels the most secure and manageable for most. It’s still also the go-to fall back when the ole’ chip and pin doesn’t work, so it’s still very much in play, in fact the growth of cash circulation outpaced economic growth over the last 10 years. Despite the fact there has never been more cash in circulation worldwide, we are slowly moving towards a cashless society, but the eventuality of a 100% cash free world is still highly debatable.

What do you think? Would you be prepared to burn all your cash in return for liquid assets and the promise of a risk-free digital payments sphere?

Sources:

https://www.thetimes.co.uk/article/ten-years-of-contactless-payments-ck00rsx9p

http://www.theukcardsassociation.org.uk/history_of_cards/index.asp

https://www.finance-monthly.com/2018/07/over-a-third-think-the-uk-will-be-cashless-in-10-years-or-less/

https://www.finance-monthly.com/2017/02/a-cashless-society-the-urban-myth-of-2017/

https://www.finance-monthly.com/2018/08/high-level-of-cyber-security-and-cashless-go-hand-in-hand/

https://www.thetimes.co.uk/article/why-contactless-is-quick-and-easy-for-fraudsters-8dg6dfbfq

https://www.equifax.co.uk/resources/identity_protection/how_to_avoid_contactless_card_fraud.html

https://www.finance-monthly.com/2017/02/a-cashless-society-the-urban-myth-of-2017/

https://money.cnn.com/2017/11/20/news/economy/cash-circulation-payment/index.html

Austin Newkirk began his insurance career at a local agency in his hometown of Toccoa, GA and later on transitioned to Country Financial for an expansion of opportunities. Currently a sales leader for the firm’s local office in Toccoa, his role involves finding new ways to market Country Financial’s products and recruiting new businesses and individuals. Below Austin tells us about his passion for insurance and how this passion changed his life!

What are the typical insurance matters that you assist clients with?

Each day I assist our customers with typical insurance matters such as servicing current policies and making sure that they are taken care of properly. I process payments daily, work on claims and make any policy changes that a client may request - these are just a few of the many things I do for my customers.

What drew you to this field?

Insurance was not my first choice as a career. I am an extrovert and I love to socialise. As I grew older and began college, I started thinking about different career paths that interested me. At that time I had no idea what I wanted to do. While in college, I served as a parts sales manager at AutoZone. I loved the job and the socialising, but there was no opportunity for advancement within that company. I started reading online and the idea about a career in insurance hit me like lightening! I love the customer service side of this job and being able to help people with something that truly makes a difference in their lives is a phenomenal feeling.

What are some of the complexities of working within insurance?

Insurance is very complex and helping people understand it can be just as challenging. When working within insurance, there are so many different aspects to focus upon, but at the same time, so many resources to help you learn. Insurance is constantly changing and there is always something new to learn.

What are the challenges that you’ve been facing recently in relation to changes in what customers expect in terms of insurance products and services?

In the insurance industry, one challenge you will always face in relation to changes in what customers expect are rates – they are constantly fluctuating. It is a battle that all agencies fight. It is especially difficult when a long-term customer with a clean record comes in and we have to tell them that the state has raised the rates. At this point, we, as professionals, have to show these customers value in what we do to keep their business.

Technology and systems are always changing and this can cause customers to be uneasy toward any change - especially when trying to show customers new products and services. Sometimes change must happen due to ever-changing factors in the insurance business and customers’ lives. With these changes, we must prepare to assist our customers with any new updates that are happening frequently. Programs are added and removed, making everything change which, in turn, can upset our customers and sometimes, the agent too. Due to mandated insurance laws, every company and its agents should always be prepared to adapt to new changes in the insurance industry.

What do you hope to accomplish in the future?

Working in insurance has changed my life. My goal is to open my own office in just a few short years and run a successful insurance business of my own. I’m going to continue to love the career path I have chosen and continue to help service my clients to the best of my abilities.

I encourage any person who’s not sure what career path to take to look into the insurance industry. It is a sector that will always be around and there is always opportunity for advancement. The satisfaction of helping a person identify their needs and providing them with a solutions is very satisfying and it makes me feel like I have helped someone in need.

If the recent software failures in the financial industry are anything to go by, then disruption to payment systems are becoming the ‘new normal’. This week David O Riordan, Principal Technical Engineer, SQS Group, delves into the benefits of blockchain, in particular in the aftermath of a software disaster.

The VISA card payment outages, Faster Payments issues and disruption to card payments at BP petrol garages, all within the first half of 2018, have caused many to question the regulatory environment around financial institutions. And with the Bank of England and FCA requesting banks to report on how prepared they are for IT meltdowns, stating that any outages should be limited to just 48 hours, the finance industry is under real scrutiny when it comes to technology.

Corporations are now expected to have a Disaster Recovery (DR) and business continuity plan put into place to avoid falling victim to software failures. Nevertheless, what business leaders need to understand is that while no IT solution is completely foolproof, and will likely go down from time to time, the key is knowing how a potential internal failure can be mitigated without affecting the overall performance. This can only be achieved with a well-practiced DR plan that is second nature to the responsible parties and can be executed in the desired timeline. However, this can be both costly and time-consuming to set up. How can such incidents be minimised, or potentially eliminated, in the future? Blockchain is an alternative technology solution business leaders should consider, as it has fraud protection already built-in and is highly resistant to all type of attacks and failures.

Blockchain for Business Continuity

Built-in Fraud Protection:

Blockchain is a de-centralised platform, where every node in the network works in concert to administer the network and no single node can be compromised to bring down the entire system. It is a form of distributed ledger where each participant maintains, calculates and updates new entries into the database. All nodes work together to ensure they are all coming to the same conclusions, providing in-built security for the network.

Most centralised databases keep information that is up-to-date at a particular moment. Whereas blockchain databases can keep information that is relevant now, but also all the historical information that has come before. But it is the expense required to compromise or change these databases that have led people to call a blockchain database undisputable. It is also where one can start to see the evolution of the database into a system of record. In the case of VISA and other payment systems, this can be used as an audit trail to track the state of transactions at all stages.

Ingrained Resiliency:

Additionally, blockchain removes the need for a centralised infrastructure as the distributed ledger automatically synchronises and runs across all nodes in the network by design. As a result, Disaster Recovery (DR) is essentially built in, eliminating the need for a synchronised DR plan. The inability to alter entries in the ledger also contributes to the overall security of the blockchain, improving resilience against malicious attacks.

This is unlike traditional large centralised systems where resilience is provided by failover within a cluster, as well as site-to-site Disaster Recovery at a higher level. Disaster Recovery plans and procedures can be costly due to a large amount of hardware and data replication required. Furthermore, most businesses often do not execute it, so when disaster strikes, corporations are not prepared to deal with the aftermath; as seen with VISAs outage problems.

The Downside of Decentralised Blockchain Technology

Performance:

While blockchain can be used as a system of record, and are ideal as transaction platforms, they are slow compared to traditional database systems. The distributed networks employed in blockchain technology means they do not share and compound processing power like traditional centralised systems. Alternatively, they each independently service the network; then compare the results of their work with the rest of the network until there is an agreement that an event has happened.

Confidentiality:

In its default, blockchain is an open database. Anyone can write a new block into the chain and anyone can read it. Private blockchains, hybrid limited-access blockchains, or ‘consortium’ blockchains, can all be created, so that only those with the appropriate access can write or read them. If confidentiality is the only goal then blockchain databases offer no benefit over traditional centralised databases. Securing information on a blockchain network requires a lot of cryptography and a related computational liability for all the nodes in the network. A traditional database avoids such overhead and can be implemented ‘offline’ to make it even more secure.

Blockchain for Disaster-Relief?

As an emerging digital disruptor technology, no one can say for sure where blockchain technology will ultimately lead. While many have disregarded this technology, the potential is certainly there to attempt to solve some of the most common problems in the digital space.

However, with high customer demands on the increase within financial services and with the combination of a widespread network and substantial cost pressures, IT outages will continue to impact consumer experience. Businesses can minimise potential damage by managing communication effectively and dealing with the technical nature of the outage quickly. With a comprehensive and well-rehearsed data recovery plan, it can not only mitigate outages but maintain standards of service too. This will encourage customer retention, loyalty and growth. Therefore, blockchain should be considered, as it has a built-in check and balance to ensure a set of colluding computers can’t ‘game’ the system; as the network is virtually impossible to crack. As blockchain processing efficiency improves, it will increasingly become a more viable proposition, potentially making traditional disaster recovery unnecessary in the future.

With the future looking more cashless by the day, the future of cybersecurity looks even more risk heavy. Below Nick Hammond, Lead Advisor for Financial Services at World Wide Technology, discusses with Finance Monthly how banks/financial services firms can ensure a high level of cyber security as we move towards a cashless society.

Debit card payments have overtaken cash use for the first time in the UK. A total of 13.2 billion debit card payments were made in the last year and an estimated 3.4 million people hardly use cash at all, according to banking trade body UK Finance.[1] But with more people in the UK shunning cash in favour of new payments technology, including wearable devices and payment apps as well as debit and credit cards, the effects of IT outages could be more crippling than ever.

Take Visa’s recent crash, for example, which left people unable to buy things or complete transactions. Ultimately, payment providers were unable to receive or send money, causing serious disruption for users. And all because of one hardware issue. Finding new ways to mitigate the risk of system outages is a growing area of focus for financial services firms.

Application Assurance

At a typical bank, there will be around 3,500 software applications which help the bank to deliver all of its services. Of these, about 50-60 are absolutely mission critical. If any of these critical applications goes down, it could result in serious financial, commercial and often regulatory impact.

If the payments processing system goes down, for instance, even for as little as two hours in a whole year, there will be serious impact on the organisation and its customers. The more payments systems change to adapt to new payments technology, the more firms focus their efforts on ensuring that their applications are healthy and functioning properly. As Visa’s recent hardware problems show, much of this work to assure critical applications must lead firms back to the infrastructure that their software runs on.

Having a high level of assurance requires financial services firms to ensure that applications, such as credit card payment systems, are in good health and platformed on modern, standardised infrastructure. Things become tricky when shiny new applications are still tied into creaking legacy systems. For example, if a firm has an application which is running on Windows 2000, or is taking data from an old database elsewhere within the system, it can be difficult for banks to map how they interweave. Consequently, it then becomes difficult to confidently and accurately map all of the system interdependencies which must be understood before attempting to move or upgrade applications.

Protecting the Crown Jewels

Changes to the way financial services firms use technology means that information cannot simply be kept on a closed system and protected from external threats by a firewall. Following the enforcement of Open Banking in January 2018, financial services firms are now required to facilitate third party access to their customers’ accounts via an open Application Programming Interface (API). The software intermediary provides a standardised platform and acts as a gateway to the data, making it essential that banks, financial institutions, and fintechs have the appropriate technology in place.

In addition, data gets stored on employee and customer devices due to the rise of online banking and bring-your- own- device schemes. The proliferation of online and mobile banking, cloud computing, third-party data storage and apps is a double edged sword: while enabling innovative advances, they have also blurred the perimeter around which firms used to be able to build a firewall. is no longer possible to draw a perimeter around the whole system, so firms are now taking the approach of protecting each application individually, ensuring that they are only allowed to share data with other applications that need it.

Financial services firms are increasingly moving away from a product-centric approach to cyber-security. In order to protect their crown jewels, they are focusing on compartmentalising and individually securing their critical applications, such as credit card payment systems, in order to prevent a domino effect if one area comes under attack. But due to archaic legacy infrastructure, it can be difficult for financial institutions to gauge how applications are built into the network and communicating with each other in real-time.

To make matters more difficult, documentation about how pieces of the architecture have been built over the years often no longer exists within the organisation. What began as relatively simple structures twenty years ago have been patched and re-patched in various ways and stitched together. The teams who setup the original systems have often moved on from the firm, and their knowledge of the original body has gone with them.

The Next Steps

So how can this problem be overcome? Understanding how applications are built into the system and how they speak to one another is a crucial first step when it comes to writing security policies for individual applications. Companies are trying to gain a clear insight into infrastructure, and to create a real-time picture of the entire network.

As our society moves further away from cash payments and more towards payments technology , banks need the confidence to know that their payments systems are running, available and secure at all times. In order to ensure this, companies can install applications on a production network before installation on the real system. This involves creating a test environment that emulates the “real” network as closely as possible. Financial players can create a software testing environment that is cost-effective and scalable by using virtualisation software to install multiple instances of the same or different operating systems on the same physical machine.

As their network grows, additional physical machines can be added to grow the test environment. This will continue to simulate the production network and allow for the avoidance of costly mistakes in deploying new operating systems and applications, or making big configuration changes to the software or network infrastructure.

Due to the growth in payments data, application owners and compliance officers need to be open to talking about infrastructure, and get a clear sense of whether their critical applications are healthy, so that they can assure them and wrap security policies around them. An in-depth understanding of the existing systems will enable financial services firms to then upgrade current processes, complete documentation and implement standards to mitigate risk.

[1] http://uk.businessinsider.com/card-payments-overtake-cash-in-uk-first-time-2018-6

Jeffrey Wernick is an independent investor whose portfolio includes early holdings in Uber and Airbnb. Wernick started buying bitcoin in 2009, the year it was created. Wernick says that people misunderstand bitcoin because it is often explained as a payment mechanism instead of as a store of value.